India and Nepal are likely to firm up an agreement on power trading soon amid Prime Minister Narendra Modi's emphasis that cooperation in this sector will be beneficial to both countries.

Sources said that the 'Power Trade Agreement', a framework pact, is ready and a draft has been given to India. This draft will now go through various approvals including from the Cabinet after which the pact could be signed.

Modi, while pushing for exploitation of the huge potential of hydropower resources in Nepal, has said India will like to partner the country in this sector.

Modi, who arrived here on a two-day visit to Nepal, addressed the Constituent Assembly today.

During his speech, Modi referred to the immense potential Nepal has in terms of hydro power, tourism and herbal medicare.

Talking about India's eagerness to cooperate with Nepal, he said this country has rich resource of water which can "end darkness" in India through power generation.

"We don't want it free. We want to buy power. We don't even want to take your water...India wants to walk shoulder to shoulder with you. You take the decisions. By just selling power, you can become a developed nation," Modi said.

He said, "You have such immense power, such big opportunity. You come forward on development path and Constitution-making, we are committed to fulfill our 'padosi dharam' (neighbour's duty)."

Last week, a parliamentary panel in Nepal had asked the government to sign the PTA with India as soon as possible to open the door of economic prosperity for the country suffering from long power outages.